Lack of Service of Notice deprive the Jurisdiction of Reviewing Authority: Bombay HC [Read Judgment]

Notice - Re-assessment

The High Court of Bombay in The Additional Commissioner of Sales Tax vs. Ankita Implex, held that the reviewing authority will not acquire proper jurisdiction if there is no valid service of notice.

The assessee is engaged in the business of electronic goods. The assessee registered itself as a dealer under the Maharashtra Value-added Tax Act, 2002 (MVAT) and the CST Act. The registration was granted on 14th August 2006.  After some years, the assessee-respondent applied to the Sales Tax Officer for cancellation of the registration certificates and the certificates were cancelled with effect from 1st April 2009. In the website of the sales tax department, the certificates were shown to be cancelled from 14th August 2006 i.e. from the inception of the business. The assessee came to know that the Deputy Commissioner of Sales Tax had reviewed the cancellation order and had in his order cancelled the registration from 14th August 2006.  The assessee had not received any notice regarding the review of order of cancellation. An appeal was filed before the Joint Commissioner of Sales Tax (Appeals) who dismissed the same. Thereafter appeal was filed before the Tribunal, which also dismissed the appeal. The assesse approached before the High Court of Bombay and the court quashed and set-aside the orders of the Tribunal and appeals were restored to the Tribunal for re-hearing.  The tribunal after hearing the parties set aside the order of cancellation of registration from inception.

The revenue appealed before the High Court. The counsel for the revenue argued that participation by the assessee-respondent in the review proceedings amounts to waiver of notice and, therefore, finding of the Tribunal that the review proceedings were bad in law for want of jurisdiction is incorrect. He further submitted that the Tribunal upon appreciating evidence/material on record rendered a finding in favour of the Revenue, that “entire exercise of the respondent is an exercise of fraud and evasion”.

Referring its decision in the case of Commissioner of Sales Tax, Maharashtra State, Bombay v. Shrimal Sakharchand, the bench comprising of Justice Sandeep K. Shinde & Justice M.S. Sanklecha viewed that powers of the review under section 25 of the MVAT Act,2002 could not be exercise unilaterally and such powers could only be invoked after a notice is served as per Rule 87(1) of the MVAT Rules,2005.

“It is true that the Tribunal in paragraph 35 has ultimately found that entire exercise/ activity of the Appellant or somebody who has used the appellant was an exercise in fraud and evasion, but such a finding on merits in favour of appellant does not further the case of the Appellant-State for want of jurisdiction… There is nothing on record to indicate that the authorities resorted to substituted service after having formed the opinion that the respondent could not be served by one of the modes contemplated under Rule 87(1). We are therefore, of the view that reviewing authority, had not acquired jurisdiction to review its order dated 11.6.09 and cancel the registrations under both the Acts since inception i.e. 14.08.09, for want of valid service of notice. Thus, finding recorded by the Tribunal in paragraph 37 that notice for review has not been properly served on the Appellant cannot be faulted with.” said the bench.

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